Question-and-Answer Session
Operator
(Operator Instructions) Your first question is from Elizabeth Parrella – Merrill Lynch
Elizabeth Parrella – Merrill Lynch
Just going back to your announcement that you're going to go ahead and do $200 million of buy backs, one of the things you mentioned back in September was the PG&E RFO that you're participating in. Can you give us an update on the status of that, how that's looking and whether that was a factor in the decision or if it was more driven by stock price? Maybe you could just walk through those questions with us?
Ed Muller
Sure. I'd be glad to tell you as much as I can, Elizabeth. First, I'm limited in what I can tell you by confidentiality agreements, which we have to comply with, so I can't say more about the RFO that PG&E has out there.
We've looked at a variety of factors in sizing the $200 million, ranging from our expected capital expenditures to the outlook for the business, the fact that guidance has come down both for this year and next year by a little more than $100 million of EBITDA, effectively cash, by the fact as you will see in our 10-Q, that with the sharp fall in the equity markets we expect to have to make a cash contribution to our pension plan upwards of $60 million, by the fact as we've just said, that we have increased slightly the budget for the Maryland Environmental CapEx Program.
We've taken all that into account when we run a, as we have always for this, a downside case. We've been returning cash while we of course have a market case that we run and an upside case for our own internal purposes, we run in terms of determining how much cash we need to keep in the business, a downside case and in doing that, we've arrived for now at the $200 million.
Elizabeth Parrella – Merrill Lynch
The pension contribution that you mentioned, would that be in '09 and presumably that's in your cash flow guidance for next year?
Ed Muller
We are still evaluating this but our current thinking is that we would actually do it for this year.
Elizabeth Parrella – Merrill Lynch
And I'm sorry is it in the guidance now or is it not?
Ed Muller
It is in the guidance.
Elizabeth Parrella – Merrill Lynch
Question on a different topic for you, the hedging slide where you explained these white boxes that represent our effective reduction in the percentage hedged, mostly because you're expected generation has gone up.
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